State Legislative Developments Aimed At Tackling The Problem Of Rising Health Care Costs

What happened?

The Pennsylvania House Insurance Committee held a public hearing

last month to receive testimony concerning proposed legislation

that would re-establish the certificate of need ("CON")

process for health care providers, and prohibit physician

self-referrals to health care providers in which the physician has

a financial interest.

What does it mean?

If the proposed legislation is enacted, Pennsylvania would join

a majority of states that have similar CON laws, which are intended

to reduce health care costs by restricting capital expenditures on

health care equipment and other large purchases and eliminating

potentially abusive arrangements that cause over utilization of

health care services. The measure is not without controversy,

however, as opponents to the legislation have argued it may result

in reduced access to care, and have noted the lack of evidence

demonstrating that CON programs result in lower health care

costs.

Pennsylvania House Bill 3051 was introduced early in

the 2007-2008 legislative session by State Rep. Phyllis Mundy

(D-Luzerne). The central purpose behind H.B. 305 is to attempt to

control health care costs for consumers. The vehicle by which H.B.

305 seeks to accomplish this is through the re-establishment of the

Pennsylvania CON program for health care providers. Laws requiring

CON approval for major capital expenditures and significant new

clinical programs existed in Pennsylvania since the late 1970s as

part of the Health Care Facilities Act, 40 P.S. §§

448.101 et seq., but were left to expire in December 1996.

State CON programs typically require that health care providers

seek approval from their state health departments prior to

establishing and licensing a health care facility, expanding

existing health care services, or embarking upon large capital

expenditures to purchase health care equipment or other facility

improvements. Many state CON laws were initially enacted as part of

the Health Planning Resources Development Act of 1974, a federal

law which required states to implement procedures for prior

approval of major capital projects and equipment purchases, and

allowed participating states to receive CON federal funds. In 1987,

the federal mandate was repealed along with its federal funding and

within 10 years, 14 states discontinued their CON programs,

including Pennsylvania.

Without a CON program, Rep. Mundy asserted that "expensive

high-tech equipment, physician-owned surgical facilities and other

medical technology often is overused and...